I had the chance this week to reconnect with Vishal Vyas, head of operations at India’s top bullion dealer, Pushpak Bullions Pvt. Ltd.
It was a powerful conversation, as Vishal indicated that the Indian Government and Central Bank is stepping up its fight against gold, with punitive taxation and trade controls. As a result he added, gold is now trading at elevated levels of $1800 oz. within the country. Despite these changes however, Indian families are still buying gold insmall quantities every month”.

silverInvariably, as the price of silver and gold begins moving higher, more investors will be drawn in to the mostly paper precious metals market.
Most of these buyers will be looking only at the price and could therefore be setting themselves up for a substantial disappointment. Many will simply take their losses and exit the market feeling scorned, perhaps never to return.
Those who see few alternatives, or who perhaps actually take delivery of physical metal will be faced with a steep learning curve that will hopefully be overcome by necessity at the least, and curiosity at best.
All long term precious metal investors will probably at some point end up asking themselves the following questions about the precious metals market.

Penasquito Revenue vs EarningsOne of the largest by-product silver mines in the world recorded a loss during the second quarter of 2013.  This primary gold mine located in Mexico, produced nearly 24 million ounces of by-product silver in 2012.  If we compare this mine to the top primary silver mines in the world, it ranks as the third largest.
If the price of gold or silver fell to the levels that some of the more bearish analysts have forecast, it would mean the ENTIRE WORLD’S GOLD & SILVER PRIMARY MINING INDUSTRY would be losing serious money.

What started out as a quiet and sideways week in the metals and miners, finished off explosively!
Technical gold trader Gary Savage noted in weekend commentary that Friday’s explosive finish in gold confirms yet another trading cycle, which may assault the 200 day moving average at $1500 oz. within the next two weeksHe further added that as a result of the strength of this close, he also expects a 10%-15% move in the miners this week!
We are witnessing A Historic Moment (and launchpad) For The Metals & Miners!

There is increasing evidence that another Financial and Economic Meltdown is coming and that it will be worse than the one in 2008-2009. And even respected Financial Establishment Figures like John Hussman are beginning to go public with their concerns.
Indeed, perhaps The Main Indicator – The Greatest Bubble Asset – that a Great Meltdown is coming is already signaling it is launching.

obama gun controlAs the below document reveals, the United Nations Office for Disarmament Affairs (UNODA) has convened a Disarmament Commission- tasked with solving the dilemma standing in the way of the global implementation of Agenda 21- namely the estimated 500 million weapons currently in the hands of American civilians.

We have identified several problems that must be addressed.  They are:
1. Classification of military grade weapons to be made illegal for possession
2. Creation of programs to provide reasonable compensation for voluntary surrender of said arms
3. Codification of laws to begin the restricting and strict licensing of concealable firearms4. Codification of laws to begin the restricting and strict licensing of hunting grade firearms
5. Codification of laws to restrict the sale of, and possession ammunition and components to manufacture ammunition
6. Finally, codification of laws to completely make any and all firearms illegal to own, possess, or use outside of military and law enforcement usage
7. Creation of a United Nations Police Taskforce with the specific mission of assisting member nations with the collection of weaponry from civilian hands

The UNODA’s full release is below:

This week saw a very important upward price breakout, reversing several key moving averages for the precious metals. This week’s recap also includes detailed discussion of the importance of key inventory supply indicators and negative GOFO rates.
Negative GOFO rates are all about an all-time-low LIBOR, combined with a mildly increasing Gold Lease Rate.  A GLR over 0.40% is nothing historic; therefore the “historic” negative GOFO rates are all about LIBOR’s historic lows along with some mild moves in the GLR.  I’m not saying a supply shortage does not exist.  All I’m saying is, negative GOFO rates aren’t “smoking gun” evidence of this with LIBOR at 0.39%.
Half the GOFO story is about historically low LIBOR rates, and the other half is about an increase in the Gold Lease Rate.  The next question is, what made the GLR rise? 

Perhaps its an impending default at the LBMA?


On this week’s Metals & Markets The Doc & Eric Dubin discuss:

  • A break from the traditional Friday cartel bashing as gold and silver blasted higher through $1400 $24, and closed at $1398 and $24.08 respectively!
  • Triggering Friday’s precious metals rally, a weaker than expected July home sales report, coming in at 394k vs consensus of 486k, and a 13.4% decline over June- the steepest monthly drop in 3 years!
  • Silver options expiration Aug. 27:  Expect cartel to desperately attempt to defend $25.50 and then, $26.  Look for a pause and short correction in silver prior to a massive assault on $30!
  • The Doc’s report on physical market trends for the US bullion market
  • War:  When all else fails, it’s the “go to” solutionWhy would President Assad gas his own people when he knows the US has declared the use of chemical weapons as a “red line” that if crossed would likely mean escalation/intervention?   Russia may very well be correct in accusing the US backed rebels as being behind a false flag. 

 We dive in to these topics and much more in this week’s SD Weekly Metals & Markets!

falling-bearThe US stock markets have enjoyed a dazzling year, levitating to a long series of new record highs.  But this relentless advance has stalled in August, with selling pressure mounting.  Even most of the bulls readily agree that a material selloff is overdue after such a mighty run. 
But actually the odds are high this necessary retreat will extend well beyond normal pullbacks or even corrections into a new cyclical bear.

bank panicLegendary gold trader Jim Sinclair sent out an email alert this weekend advising readers that the current rally in gold and silver is the long awaited BIG ONE, that $50 silver is a given here, stating that the current move: This gold bull price phase is the one long predicted here that will return the most money to the fewest in the shortest period of time.

Sinclair states that as long anticipated, the bullion banksters have flipped and have clearly begun manipulating gold and silver to the bullish side, as the most massive move of the entire bull market lies directly ahead.
Sinclair’s full MUST READ alert is below:

5000 goldThe financial crisis has been a fixture since 2008 when Lehman failed.  The crisis became acute when QE began, and later the hyper monetary inflation was clear as permanent  In the last several months, the perma-crisis elevated in danger level, from a skein of high risk critical extreme events.
The Gold price will rise dramatically in the future from numerous powerful forces and factors.
The following factors are directly relevant as to why the Gold Price will rise to $5000 per ounce, then higher.   At the same time, the Silver price will rise multiples higher. The gains for Silver will most likely be a greater multiple than seen on the Gold price rise. The shortage for Silver is astounding and obvious to analysts and experts, except those who work for banks. The shortage for Gold is more subtle, as thousands of tons have been leased illicitly. Therefore the accounting is replete with double counting and outright missing accounts in false reporting.
The following are 13 fundamental and locked-in-stone reasons why gold will first hit, and then surpass $5,000/oz.

Eighty years ago $100 purchased 400 ounces of silver while today that $100 purchases about 4 ounces. Someday soon $100 will purchase only one ounce of silver.
Depending on how rapidly the money supply is increased and how quickly confidence in paper money evaporates we may see the day when it takes ten, or more, $100 bills to purchase a single ounce of silver. Hyperinflation has happened in many countries in the past 100 years and many good analysts believe that it COULD occur again in Europe and the United States.  If hyperinflation occurs, your silver and gold will be worth much more in nominal dollars and will, to some extent, protect your purchasing power. Unfortunately, life in a hyperinflationary economy is likely to be exceedingly difficult for most people.
Prepare by purchasing physical silver and gold and storing it outside the banking system.

sprottIn this MUST WATCH interview, Sprott Asset Management’s Eric Sprott states that the Fed’s taper talk was smoke and mirrors intended to hammer the price of gold from day one, and that gold is ready to live its own life based on fundamentals!

Eric Sprott’s full MUST WATCH thoughts on taper, gold and silver shortages, bail-ins, and whether the next massive rally in the metals is underway is below:

beach ball*Update: As predicted, after consolidating throughout the late morning and early afternoon near the $23.80 level, silver has just gone vertical again to the upside in the afternoon access market, and has just sliced through $24 to the upside with a last of $24.24.
Meanwhile, gold has crossed its 100 DMA, and broke above $1400!

Will we see a weekly close over $24 and $1400 setting up a massive rally to start next week?

BernankeOur favorite Aussie comedians turn their focus on Ben Bernanke and the Fed’s  “taper” threats in the following must see sketch.

Bernanke might say that there is some thought being given to tapering.
And what is tapering?  Tapering is a relative concept that describes the looming possibility of some intentionality in the area related to monetary policy.
Tapering what?  Tapering the easing!
Correct! And what would happen if easing were tapered Adam?  Oh that would be a complete catastrophe!
Correct! Why?  Well because the problem with the economy is that the money in it was vaporized due to a filing error a few years ago and the market is now completely dependent on infusions of money from the central bank. 
And what happens when Ben Bernanke is due to make a statement Adam?  Oh there are safety procedures right across the market.  Get under your desk, go and stand in the doorway-somewhere safe.  Don’t touch anything electrical with wet hands.
Correct! For that round Adam you’ve won an algorithm!

silver shortageMany observers have realized that the price of silver will rise dramatically at some point because the amount of paper silver is many times the amount of physical silver. When this fact is even partially acknowledged by the mainstream, silver will probably move much higher.
The impact from the real silver story reaching the mainstream will be unmistakable.

What in the world is happening to our financial markets?  Trading on the Nasdaq was halted on Thursday for more than 3 hours, and the only formal explanation that we got was that it was a “technical issue” On Tuesday, Goldman Sachs made thousands of “erroneous trades” that are now being canceled.  If those trades had not been canceled, it could have cost Goldman “hundreds of millions of dollars” according to the Wall Street Journal.  How nice for them that they get a “do over”.  When Knight Capital made a similar “trading error”, they were not so fortunate.  Our financial system has become completely and totally dependent on computers, and that means that it is extremely vulnerable.
After what we have witnessed this week, how can they actually expect us to have faith in these financial markets?
And what happens if these “technical issues” get even worse?

Ever since the big take-down in the price of the precious metals in April of this year, an interesting trend has taken place in the Gold & Silver Eagle market.  While demand for both coins remained strong in the first four months of the year, investors are now overwhelming purchasing more Silver Eagles — banking on much higher gains in silver than gold.
The gold to silver sales ratio was 19.5/1 in April, fell to 80/1 in July and so far in August it is a staggering 489/1!
Over the last month,  investors are overwhelming purchasing nearly 500 times as many Silver Eagles as Gold Eagles from the US Mint!

We’re still in the midst of the biggest bubble in world history. It’s bigger than the tech stock market bubble around the turn of the century. It’s bigger than the real estate bubble…[it’s] the bond bubble. With interest rates ranging from zero to a few percent—this is the biggest bubble in history and when it collapses, it’s going to be catastrophic because the bond market is so huge.”

Barack Obama has been running around the country taking credit for an “economic recovery”, but the truth is that things have not gotten better under Obama.  Compared to when he first took office, a smaller percentage of the working age population is employed, the quality of our jobs has declined substantially and the middle class has been absolutely shredded.  If we are really in the middle of an “economic recovery”, why is the homeownership rate the lowest that it has been in 18 years?  Why has the number of Americans on food stamps increased by nearly 50 percent while Obama has been in the White House?  Why has the national debt gotten more than 6 trillion dollars larger during the Obama era?  Obama should not be “taking credit” for anything when it comes to the economy.  In fact, he should be deeply apologizing to the American people.

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So let’s pretend for the moment that the Federal Reserve gets everything it has stated it wants.  And even further: that Washington, D.C. gets everything it wants, too.
The credit markets are repaired, and massive new loan growth flows out the door.  Loans are made to businesses that hire gobs of new people.  Consumers borrow and borrow some more to go to school and buy homes, cars, and gadgets.  Inflation remains low and job growth explodes.  Tax receipts climb and the deficit falls.  The stock market goes higher and higher, gold falls and then falls some more, as confidence in the system, its masters, and its institutions grows.
The Fed wins and D.C. wins.   But in reality, we all lose.
It’s all just a matter of timing.